Tax Deductions
Know Your Options
As a small business owner, you know that taxes can be a major headache. But did you know that there are a number of tax deductions available to you that can help you save money?
In this blog post, we'll take a look at some of the most common small business tax deductions. We'll also discuss how to track your deductions and how to claim them on your tax return.
What are tax deductions?
A tax deduction is an expense that you can subtract from your business income before you calculate your taxes. Tax deductions can lower your taxable income, which can result in lower taxes owed.
The top five most common business tax deductions are as follows:
- Business Expenses: This deduction encompasses a wide range of ordinary and necessary expenses incurred in the course of running a business. Examples include rent, utilities, office supplies, employee salaries, advertising costs, and professional fees.
- Vehicle Expenses: If you use a vehicle for business purposes, you can deduct expenses related to its use, such as fuel, maintenance, repairs, insurance, and depreciation. It's important to keep detailed records of your business mileage to accurately calculate this deduction.
- Home Office Deduction: If you use a portion of your home exclusively for business purposes, you may be eligible for the home office deduction. It allows you to deduct a percentage of your home-related expenses, such as rent, mortgage interest, property taxes, utilities, and maintenance costs.
- Travel and Entertainment Expenses: When you travel for business or entertain clients, you can deduct associated expenses. This includes transportation costs, accommodation, meals, and entertainment expenses directly related to your business activities. However, there are specific rules and limitations on deductibility, so it's essential to maintain proper documentation.
- Health Insurance Premiums: If you are self-employed and pay for your health insurance, you may be able to deduct the premiums as an adjustment to your income. There are specific requirements and limitations, so consult a tax professional or refer to the IRS guidelines to ensure eligibility.
Please note that tax laws and regulations can change over time, so it's important to consult with a tax professional or refer to the latest IRS guidelines to get accurate and up-to-date information on business tax deductions.
Learn More About Tax Deduction
To get a better understanding of other tax deductions, check out the 17 Big Tax Deductions (Write Offs) for Businesses on bench.co.
https://bench.co/blog/tax-tips/small-business-tax-deductions